Sherkhan Farnood, founder of Kabul Bank, speaks in court in Kabul on Tuesday. An Afghan court handed down jail time to nearly two dozen men accused of involvement in a multimillion-dollar bank fraud. (OMAR SOBHANI/Reuters)

KABUL — An Afghan court on Tuesday convicted the two men accused of orchestrating Afghanistan’s largest banking scandal of stealing more than $800 million from Kabul Bank and sentenced each to five years in prison.

The bank’s former chairman, Sherkhan Farnood, and former chief executive officer, Khalilullah Ferozi, were found guilty of stealing $278 million and $530 million, respectively, and were ordered to pay back that money, the equivalent of about 5 percent of the country’s GDP. Nineteen other men were also found guilty of fraud; 18 were given short jail sentences.

Farnood’s and Ferozi’s punishments, which could be altered in appeal proceedings, were considered light by Afghans and Western officials, many of whom were outraged at the scale of the fraud and the well-connected men associated with it. Close relatives of President Hamid Karzai and Vice President Mohammed Fahim owned shares in the bank. None of them were prosecuted.

Afghan judges recast the charges against Farnood and Ferozi so the men wouldn’t be tried for money laundering, a crime that in Afghanistan typically carries a much longer sentence than the one the men were given. Without a money laundering charge, Afghan officials cannot order the confiscation of money held in offshore accounts, where much of the bank’s missing funds are thought to be.

“Today was a disappointment for the resolution of issues resulting from the Kabul Bank fraud. International standards require sanctions that are proportionate, dissuasive, and effective. We feel that this is lacking in the judgment issued today,” said Drago Kos, chairman of the Independent Joint Anti-Corruption Monitoring and Evaluation Committee, an organization established by the Afghan government to report on graft.

In 2010, The Washington Post reported that the bank’s bosses were offering influential Afghans multimillion-dollar loans that were spent on luxury villas in Dubai.

“What I’m doing is not proper, not exactly what I should do. But this is Afghanistan,” Farnood said at the time.

The more than $500 billion invested by the United States in Afghanistan since 2001 has been a boon to Afghanistan’s banking sector, which was nearly nonexistent under the Taliban, the radical Islamist movement that ruled from 1996 to 2001. Kabul Bank opened more than 60 branches during the first nine years of the war.

It offered nearly $1 billion in loans and doled out more than $1 million in lottery prizes to its depositors. But the vast majority of its loans, investigators would later discover, went to fewer than two dozen people or companies, many with connections to the government.

Kevin Sieff has been The Post’s bureau chief in Nairobi since 2014. He served previously as the bureau chief in Kabul and had covered the U.S. -Mexico border.

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